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Millennials are on track to become the wealthiest generation in history, but are they ready for the massive influx of money?
It is estimated that a massive $90 trillion wealth transfer over the next 20 years could make Millennials the “richest generation in history.” Global real estate advisory firm Knight Frank.
The so-called Silent Generation – those typically born between 1928 and 1945 – and Baby Boomers – those born between 1946 and 1964 – will “hand over” power to Millennials, study finds — the generation born between 1981 and 1996 — when they transfer their assets.
Millennials are portrayed as lazy, thoughtless consumers who are more interested in digging into their pockets for avocado toast than saving up for a house – so how capable are they at managing their massive income streams?
Salvatore Buscemi, co-founder and managing partner of multi-family office Brahmin Partners, told CNBC: “Millennials are very ill-prepared… They are not as prepared as the wealth-creating generation.”
He explained that when millennials inherit this wealth, they will be in their 40s and may not have the ability to start a business or invest.
“They haven’t had the skills to do this before because they’ve never had to do it – they’ve never been forced to do it,” he said. “The question is – will they be motivated to push themselves to acquire these skills later in life?” Buscemi asked, adding that human nature shows that people As they age, they are less willing to learn new skills.
Experts say Millennials are likely to focus on near-term goals, while generations before them were more focused on saving for milestones like building a home and retirement.
Despite the 2008 global financial crisis, Millennials “More distant” from the suffering of World War II and its aftermathThe RBC Wealth Management report notes that this helps shape parents’ views on money.
Additionally, according to research from financial services company LendingClub, Millennials are the generation most likely to live paycheck to paycheck as this “sandwich generation” needs to support aging parents and their own children.
There are also differences between those who earn wealth and those who inherit it, which puts the latter at a disadvantage when it comes to managing it or coping with its loss.
“Those who have earned wealth have strong internal controls,” says clinical psychotherapist Paul Hokemeyer, who adds that those who have accumulated wealth have confidence in their abilities and abilities. , once they lose their wealth, they can regain it.
Those who inherit wealth will be less secure. “They know they can survive in a zoo, but they’re not sure they can survive in a jungle,” Hockmeier said.
However, the psychotherapist observed that Millennials tend to be wiser about the inherent power of wealth and see money more as stewards “using it to improve the world in which they feel privileged.”
—CNBC’s Sam Meredith and Jessica Dickler contributed to this report.
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